I thought I was done with this atheism series. However, I came across this passage from Wayne Dyers’s book, Your Sacred Life. A friend of mine what sapped it as a kind of admonition to those of us who don’t believe.
I want to wrap up this series on atheism with a personal story about the point in time where I started diverging from the concept of God. I was very young then, about five years old. I had lost a pencil. It had just slipped out of my schoolbag, which was nothing more than a plastic basket with open weaves and a handle. When I realized that I had lost the pencil, I was quite upset. I think I was worried that I would get a scolding for my carelessness. You see, my family wasn’t rich. We were slightly better off than the households in our neighborhood, but quite poor by any global standards. The new pencil was, to me, a prized possession.
The atheist-theist debate boils down to a simple question — Did humans discover God? Or, did we invent Him? The difference between discovering and inventing is the similar to the one between believing and knowing. Theist believe that there was a God to be discovered. Atheists “know” that we humans invented the concept of God. Belief and knowledge differ only slightly — knowledge is merely a very very strong belief. A belief is considered knowledge when it fits in nicely with a larger worldview, which is very much like how a hypothesis in physics becomes a theory. While a theory (such as Quantum Mechanics, for instance) is considered to be knowledge (or the way the physical world really is), it is best not to forget the its lowly origin as a mere hypothesis. My focus in this post is the possible origin of the God hypothesis.
The only recourse an atheist can have against this argument based on personal experience is that the believer is either is misrepresenting his experience or is mistaken about it. I am not willing to pursue that line of argument. I know that I am undermining my own stance here, but I would like to give the theist camp some more ammunition for this particular argument, and make it more formal.
I have a reason for delaying this post on the fifth and last argument for God by Dr. William Lane Craig. It holds more potency than immediately obvious. While it is easy to write it off because it is a subjective, experiential argument, the lack of credence we attribute to subjectivity is in itself a result of our similarly subjective acceptance of what we consider objective reason and rationality. I hope that this point will become clearer as you read this post and the next one.
In the previous post, we considered the cosmological argument (that the Big Bang theory is an affirmation of a God) and a teleological argument (that the highly improbable fine-tuning of the universe proves the existence of intelligent creation). We saw that the cosmological argument is nothing more than an admission of our ignorance, although it may be presented in any number of fancy forms (such as the cause of the universe is an uncaused cause, which is God, for instance). The teleological argument comes from a potentially wilful distortion of the anthropic principle. The next one that Dr. Craig puts forward is the origin of morality, which has no grounding if you assume that atheism is true.
Prof. William Lane Craig is way more than a deist; he is certainly a theist. In fact, he is more than that; he believes that God is as described in the scriptures of his flavor of Christianity. I am not an expert in that field, so I don’t know exactly what that flavor is. But the arguments he gave do not go much farther than the deism. He gave five arguments to prove that God exists, and he invited Hitchens to refute them. Hitchens did not; at least, not in an enumerated and sequential fashion I plan to do here.
Recently, I have been listening to some debates on atheism by Christopher Hitchens, as recommended by a friend. Although I agree with almost everything Hitchens says (said rather, because he is no longer with us), I find his tone bit too flippant and derisive for my taste, much like The God Delusion by Richard Dawkins. I am an atheist, as those who have been following my writings may know. Given that an overwhelming majority of people do believe in some sort of a supreme being, at times I feel kind of compelled to answer the question why I don’t believe in one.
This post is an edited version of my responses in a Webinar panel-discussion organized by Wiley-Finance and FinCAD. The freely available Webcast is linked in the post, and contains responses from the other participants — Paul Wilmott and Espen Huag. An expanded version of this post may later appear as an article in the Wilmott Magazine.
What is Risk?
When we use the word Risk in normal conversation, it has a negative connotation — risk of getting hit by a car, for instance; but not the risk of winning a lottery. In finance, risk is both positive and negative. At times, you want the exposure to a certain kind of risk to counterbalance some other exposure; at times, you are looking for the returns associated with a certain risk. Risk, in this context, is almost identical to the mathematical concept of probability.
But even in finance, you have one kind of risk that is always negative — it is Operational Risk. My professional interest right now is in minimizing the operational risk associated with trading and computational platforms.
How do you measure Risk?
Measuring risk ultimately boils down to estimating the probability of a loss as a function of something — typically the intensity of the loss and time. So it’s like asking — What’s the probability of losing a million dollars or two million dollars tomorrow or the day after?
The question whether we can measure risk is another way of asking whether we can figure out this probability function. In certain cases, we believe we can — in Market Risk, for instance, we have very good models for this function. Credit Risk is different story — although we thought we could measure it, we learned the hard way that we probably could not.
The question how effective the measure is, is, in my view, like asking ourselves, “What do we do with a probability number?” If I do a fancy calculation and tell you that you have 27.3% probability of losing one million tomorrow, what do you do with that piece of information? Probability has a reasonable meaning only a statistical sense, in high-frequency events or large ensembles. Risk events, almost by definition, are low-frequency events and a probability number may have only limited practical use. But as a pricing tool, accurate probability is great, especially when you price instruments with deep market liquidity.
Innovation in Risk Management.
Innovation in Risk comes in two flavors — one is on the risk taking side, which is in pricing, warehousing risk and so on. On this front, we do it well, or at least we think we are doing it well, and innovation in pricing and modeling is active. The flip side of it is, of course, risk management. Here, I think innovation lags actually behind catastrophic events. Once we have a financial crisis, for instance, we do a post-mortem, figure out what went wrong and try to implement safety guards. But the next failure, of course, is going to come from some other, totally, unexpected angle.
What is the role of Risk Management in a bank?
Risk taking and risk management are two aspects of a bank’s day-to-day business. These two aspects seem in conflict with each other, but the conflict is no accident. It is through fine-tuning this conflict that a bank implements its risk appetite. It is like a dynamic equilibrium that can be tweaked as desired.
What is the role of vendors?
In my experience, vendors seem to influence the processes rather than the methodologies of risk management, and indeed of modeling. A vended system, however customizable it may be, comes with its own assumptions about the workflow, lifecycle management etc. The processes built around the system will have to adapt to these assumptions. This is not a bad thing. At the very least, popular vended systems serve to standardize risk management practices.
The Asian Tsunami two and a half years ago unleashed tremendous amount energy on the coastal regions around the Indian ocean. What do you think would’ve have happened to this energy if there had been no water to carry it away from the earthquake? I mean, if the earthquake (of the same kind and magnitude) had taken place on land instead of the sea-bed as it did, presumably this energy would’ve been present. How would it have manifested? As a more violent earthquake? Or a longer one?
I picture the earthquake (in cross-section) as a cantilever spring being held down and then released. The spring then transfers the energy to the tsunami in the form of potential energy, as an increase in the water level. As the tsunami radiates out, it is only the potential energy that is transferred; the water doesn’t move laterally, only vertically. As it hits the coast, the potential energy is transferred into the kinetic energy of the waves hitting the coast (water moving laterally then).
Given the magnitude of the energy transferred from the epicenter, I am speculating what would’ve happened if there was no mechanism for the transfer. Any thoughts?